The global financial crisis is battering museum budgets and calling into question an age-old rule in the art world against selling valuable works to raise cash to fund operations.
Museums are currently facing a double whammy: The market collapse has slashed their endowments and driven down donations. Endowments of educational institutions, whose investment strategies are similar to those of museums, fell an average of 24.1 percent in the second half of 2008, according to Wilton, Connecticut–based Commonfund, which invests $42 billion on behalf of more than 1,800 nonprofit groups in the U.S.
In response to financial pressures, the J. Paul Getty Museum in Los Angeles, the world’s richest art institution, is slashing its operating budget by 24 percent, to $284 million, for the fiscal year beginning July 1, according to museum officials. Its endowment dropped 25 percent in the last six months of 2008, hitting $4.5 billion. The endowment of the Metropolitan Museum of Art in New York lost some $800 million from July 2008 through February of this year, falling to $2.1 billion, according to a statement by board chairman James Houghton. The Met expects to cut about 10 percent of its workforce, or 250 people, over the next 15 months. In March it pared its merchandising staff by 74 positions. Smaller institutions are hurting as well; more than half the museums in New York State are running operational deficits, according to the Museum Association of New York.
In a bid to keep the doors open, arts organizations are selling off valuable pieces. Known as “deaccessioning,” the practice is prohibited when it’s done to fund operations. According to professional codes of conduct that govern museums, turning cultural works into cash is only okay if museums use the money to acquire other works that enhance their collection.
But amid the worst financial nightmare since the Great Depression, a handful of institutions have already committed the dreaded “D” word, and despite a torrent of condemnation, more are likely to follow, say museum directors and art industry consultants. “It’s inevitable that people will look for the easy way out,” says Elizabeth Merritt, director of the American Association of Museums’ Center for the Future of Museums. Faced with the prospect of closing, last fall the National Academy Museum & School of Fine Arts in New York sold two Hudson River School paintings to a private buyer for $13.5 million. “Thinking of the collection as a way of balancing a budget is just absolutely not the right way to go, but we had no choice,” says the academy’s director, Carmine Branagan.
Some say the crisis calls for the adoption of situational ethics, where the ends can justify the means. “The highest purpose is to protect the collection, but we also need to figure out how to preserve the institutions themselves,” says Clifford Siegfried, assistant commissioner for museums in the state of New York.
